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Interest Rate Reforms And Financial Deepening In Nigeria

Author

Listed:
  • Tomola Marshal Obamuyi
  • J. Adeniyi Demehin

Abstract

This main objective of the paper is to examine the effect of interest rate reforms on financial deepening in Nigeria. The methodology adopted for the study includes cointegration and vector error correction models (VECM) to determine the long and short run dynamics of the model. The paper examines time series data from 1973 to 2009. The results indicate that there exists a long run relationship between financial deepening and interest rates. We also find that interest rate reform has a positive and significant effect on financial deepening in Nigeria. The results here suggest that policy makers enact measures that positively influence financial development, economic growth, liquidity reserve ratio, domestic savings/GDP ratio as well as reforms to ensure the efficiency and development of the financial system.

Suggested Citation

  • Tomola Marshal Obamuyi & J. Adeniyi Demehin, 2012. "Interest Rate Reforms And Financial Deepening In Nigeria," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(2), pages 81-90.
    • Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:2:p:81-90
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    References listed on IDEAS

    as
    1. Nicholas M. Odhiambo & Oludele A. Akinboade, 2009. "Interest‐Rate Reforms and Financial Deepening in Botswana: An Empirical Investigation," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 38(1‐2), pages 97-116, February.
    2. J. François OUTREVILLE, 1999. "Financial Development, Human Capital And Political Stability," UNCTAD Discussion Papers 142, United Nations Conference on Trade and Development.
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    Cited by:

    1. Laxman Tandan & Ananta Raj Kafle & Khageshyor Khanal, 2022. "An Econometric Analysis on Interest Rate Reforms and Financial Deepening," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(3), pages 3-22.

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    More about this item

    Keywords

    Reforms; Vector error correction model; economic growth; financial deepening;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G2 - Financial Economics - - Financial Institutions and Services

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